Monday, 17 September 2012

In
the recent past centuries, before the inception of Information and
Communications Technology (ICT), the accountants of an organization were using
a socially acceptable behavioural method of reporting accounting and economic
reports, carried out during accounting year ends, the preparation of accounting
records, book such as the profit and loss account, the balance sheet, cash
book, cash flow statement, income and expenditure accounts.

The
application of Information and Communication Technology (ICT), on accounting
practice in Nigeria has become a subject of fundamental importance and concerns
to all business enterprise and indeed a prerequisite for local and
international competitiveness. It is obvious that the way accountants plan and
take decision on what and how to provide their service in the accounting
profession has been affected immensely by Information and Communication
Technology (ICT). This has continued to change the manner in which accounting
practice and their corporate relationships are organized worldwide and the
variety of innovative device available to improve and facilitate the speed and
quality service delivery.

It
is obvious that the biggest impact of Information and Communication Technology
(ICT) has been made on accounting; and it is the ability of companies to
develop and use computerized system to track and record financial transactions
properly and accurately. The recording of business transaction manually on
ledgers, papers, spread sheets etc has been translated and computerized for
quick and easy presentation of individual financial transaction and give report
on it.(Granlund
& Mouritsen, 2003).

Avital message of the work is that researchers
in accounting Information (AIS) and other areas accounting, such as financial,
Auditing, Tax and managerial should work together on projects, as each party
can learn a great deal from the other. By so doing, a synergistic relationship
arising from such teamwork hold great potential to yield high-quality research
results that can have notable impact on the accounting profession. (James E.
Hunton, 2002).Shanker (2008) ascertains that the use of ICT
in many organizations has assisted in reducing transactional cost, overcome the
constraints of distance and have cut across geographic boundaries thereby
assisting to improve

coordination of activities within
organizational boundaries.

It
is very clear that, the computerized accounting system have improved the
functionality of accounting departments by increasing the timeliness of
accounting information. By improving the timeliness of financial information,
accountants can prepare repots and operations analysis that gives management an
accurate picture of current operations. The number of financial reports has
also been improved by computerized system; cash flow statements, market shares
reports and departmental profit and loss are now more accessible with
computerized system.

A
Prior observation shows that computerized accounting system have internal check
and balance measures to ensure that all transactions and accounts are properly
balanced before the financial statements are finally prepared. It also will not
allow journal entries to be out of balance when posting, ensuring that individual
transactions are properly recorded.

Importantly,
since the inception of Information and Communication Technology (ICT),
computerized accounting system allow accountants to process large amounts of
financial information and process it quickly through the accounting system.
Quicker processing time for individual transactions has also lessened the
amount of time needed to choose out each accounting period. Transaction that
would have taken an accountant months or years to prepare would be done quickly
and faster and thereby cutting high cost that would have resulted in preparing
these reports (Pricewaterhousecoopers, June 2008).

1.2Statement
of the problem

It seems that the use of Information
and Communication Technology (ICT), by large or small firms has been a
challenge to some users and companies.

Based
on these, it is perceived that most firms have device a way of recording and
reporting transactions. The manner in which accountants can potentially add
value to economic entities and societies is undergoing a metamorphosis. The
accountant worth is now reflected in higher order critical-thinking skills,
such as designing business processes, developing e-business model, providing
independent assurance and integrating strategic knowledge.

It
is observed that, when Information and Communication Technology (ICT) first
arrived on accounting profession, accountants initially automated existing
processes rather than envisioning how information and Communication Technology
could be used to conduct business in new and innovative ways. The system has
been set; it is the duty of accounting profession to device a means of
improving on the Information and Communication Technology (ICT).

Therefore; if accountants adopt the
use of ICT on accounting practice in Nigeria, then greater speed, accuracy,
timeliness and cost will be cut down on their task as a professional.

1.3Objectives
of the study

ICT
is presume to have affected accounting practice positively in so many ways,
research in these area have shown that ICT and its perceived importance due to
its usage across several groups of business firms, especially in the field of
Auditing. The study is aim at achieving the following objectives:

iii.To
assess and explore the impact of ICT usage since it can directly impact audit
judgment, effectiveness and efficiency which form the basis for accepting the
financial statement as to it true and fairness.

1.4Research questions

Has ICT impacted on accounting
practice since its introduction?

Are they any challenges faced by
accounting practices as a result of the adoption of ICT?

Does the use of ICT have a resulting
impact on the on the performance of audit exercise?

1.5Hypotheses

The followings null and alternative hypothesis
is guide to this work

Ho1:ICT have
created no significant impact on accounting practice

Ho2: There are no
challenges faced due to the influence ICT has on accounting practices.

Ho2: ICT does not have a
resulting effect in the performance of audit exercises.

1.6Significance of the study

Because of
the complex nature of some firms, this study gives a comprehensive approach of
firms employing ICT usage in accounting practice in Nigeria.

IAS may also use these as a basis for
setting guide and standards.

The result of this study maybe useful
to auditing firms when trying to consider the technological need to improve the
skill of their students in accounting practice.

This work can also serve researchers
needs when trying to research more on the impact of ICT on accounting practice.

It helps auditors to select the kind
of application software to employ in carrying out their audit task.

1.7Scope of the study

This research into the impact of ICT
on accounting practice covers a reasonable numbers of accounts and audit departments
in Benue State, Makurdi.It will consist of accountants in the accounting and
audit department of United Bank for Africa(UBA) Makurdi Branch, Benue State
Ministry of Finance, Office of the Accountant General.

The efficiency of accounting practice
and the factors that affect the use of ICT covers a wide aspect; ranging from
profession, statutory and a host several factors, but this work is restricted
to cover the impact within accounting practice and profession. The level of ICT
investment by firms obtained will help our result to be generalized and
practice. This study can also help in analyzing ICT environment that govern the
preparation, presentation of financial statement and audit evidence. This study
also serves as a guide for further research work on the field of ICT impact.

1.8Structure of the
study

Chapter one: These comprises
of the Introduction of the research work which includes the Background of the
study, Statement of the problem, Objective of the study, Research question, Hypothesis,
Significance of the study, Scope of the study, Structureof the study.

Chapter two: These chapter critically review related literature.
These looked at the introduction, the conceptual framework, the review of prior
study; in terms of the software, the impacts of ICT at various level, the
benefits and the summary.

Chapter three: Examine the Research methodology in terms of the
introduction, the research design, the population, the sample size, the nature
and source of data, the method of data collection, the techniques of data
analysis, the decision rule and the summary.

Chapter four: Tries to see how the data are been analyzed which
includes: the Introduction,
Data presentation, test of Hypothesis and the Summary of findings.

Chapter five: This is the Summary and conclusion of the research
work. It looked at the recommendations,
limitations of the study, Suggestion for further research and the Reference.

Audit ICT usage refers to
the manner in which auditors uses ICT throughout the process of their audit.

Auditing is the
examination and verification of a company’s financial and accounting records
and supporting documents by a professional so as to give his profound opinion
as to the true and fairness of the financial statement of that company.

Accounting information system (AIS) is a system of
collection, storage and processing of financial and accounting data that is
used by decision makers.

Enterprise Resource Planning
(ERP): is an integrated information system that serves all departments within an
enterprise.

Automated
teller machine (ATM): is an electronic banking outlet, which allows customers to
complete basic transactions without the aid of a branch representative or
teller.

CHAPTER TWO

Literature review

2.1Introduction

In
trying to assess the impact of ICT on accounting practice in Nigeria, one does
not only need to concentrates on trying to gather fresh knowledge or facts but
also need to concentrates on how to get himself familiarized with existing
studies on the same subject and how to develop solution to solving the problem
under review. In trying to do so, the researcher need to take into cognizance the
findings made in the previous studies and also be able to know the answers to
come out with; that could be useful for further research work.

Information
and Communication Technology needs not be over emphasis as people needs and
relies on information systems to communicate effectively using physical devices
(Hardware) e.g. telephone, computer, information processing and procedures(softwares) e.g. the use of DMS,SPSS, Yahoo
messenger, 2go, Facebook, communication channels (Network) e.g. intranet, extranet,
internet, intercom and data store (data resource) has been so impacting from
the onset of civilization.

2.2conceptual framework

The
advance in ICT and other business technology are making accounting practice
easier, faster and cleaner; however, the rate at which technology has been
introduced makes it more difficult for accountants to cope up with accounting
practice.

It is important to consider where
the impact of ICT lies, being in a broader information society conceptual
model. These model used by OECD 2009 to illustrate the information society,
identifies the following inter-related segments: ICT supply (ICT sector), ICT
demand (use and users), ICT infrastructure, ICT products, information and
electronic content and in a wider social and political context.

These research work will examine
the impact of ICT on Auditing, individuals, work group, employment and
production etc. and the application software that are needed in executing each
task at the various sector of the economy.

2.3Literature
review of prior study

The
effectiveness of accounting practice and increase in productivity and high
turnover as well as the profit of any organization is as a result of the impact
of ICT.

Electronic
data processing (EDP) is the process of changing raw data, facts into
information that are meaningful to the mangers and accountant for decision
making. EDP is the function of planning, recording, managing and reporting
business transactions by the use of computer and related peripherals. EDP in
accounting practice; the accountant gets the data from the source documents
which includes the receipt, invoice, payment vouchers, written cheques etc
before there are been inputed into the computer and process into information
meaningful to the users as output. (MIS by James O’Brien).

According
to Apulu and Lathan (2010), claim that ICT enables customers to receive
immediate feedback that allow companies to react fast to customers’ demands and
recognize new market niches. This entails that organizations that are able to
exploit the potentials offered by ICT can handle various types of innovative
processes in their businesses since ICT influences the performances of an
organization in multifaceted ways. Thus ICT can bring about change in
organizations and make them more competitive, innovative and assist to increase
organizational growth. Alam and Noor (2009) argue that ICT offers enterprise
avenues to compete on a global scale with improved efficiency and closer
customer and supplier relationships. Therefore, ICT should be regarded by
businesses as an important strategy to stay competitive.

Currently,
the manner in which accountants can potentially add value to economic entities
and society is undergoing a metamorphosis. Many traditional accounting task
dealing with the recording and processing of accounting transactions can be
reliably automated. In this regard, accountants add little incremental value to
organization, but now accountants worth is reflected in higher-order
critical-thinking skills, such as designing business processes, developing
financial strategies, designing e-commerce models, providing independent
assurance to companies and individuals.

2.3.1Accounting
and application software;

This is a set of computer
programs that help accountants of the 21st century to carry out
their task effectively. Prior to the 1960s, the accountants were perceived as a
book-keeper whose primary responsibility was ensuring that records were kept.
The accountants fought a constant battle against the failure and lost of records.
Computer provides more efficient means of keeping the books, and they afforded
the accountant quick access to financial information for reporting purposes.

These software and applications
have helped tremendously in impacting on work group level and business process
level.

2.3.2Impact of
ICT at business level.

Information technology has made it
possible to stay plugged in and connected on a 24/7 basis. Documents containing
information regarding business operation and performance can be access
effortlessly.

2.3.3Impact
of ICT at work group level.

Information can be easily shared
among colleague in an organization. ICT has made it possible to stay connected
24/7 with the help of:

Blackberries

Laptop

Facebook

E-mails

2go

Twitter
etc.

The problem
of one staff is not on seat so work should be delay or stop is eliminated as
you can literally be flying over the Atlantic and still be able to talk and
e-mail colleagues and clients.

2.3.4Benefits of the impacts of ICT on work
group:

Increaseproductivity

Increased
customers service relationships

Increased
freedom to work from any were

2.3.5Audit

An audit is an official inspection of
an organization books, accounts and financial statement. Audit can be carried
out internally by the internal auditors in the entity internal control
department or externally by an independent professional accountants (Auditor).
It is aimed at; providing information as to true and fairness of the financial
statement. It provide assuranceof
accountability, identifies the weakness of the internal control system and make
recommendations.

The report of the auditor form an
opinion as to the true and fairness of the financial statement. The report
provide users such as individuals, tax authority, investors, creditors,
Government etc as an assurance to rely upon for their decision making based on
the audit report.

2.3.6Impact of ICT system on auditing

(a)Computerized accounting system.

One of the greatest impact of ICT on accounting
is the ability of companies (audit firms) to develop and use computerized
system to track, extract and report on financial transactions. It allow the
auditor to report quickly and easily for decision making.

(b)Increase functionality.

Computerized accounting system have
improved upon the functionality of accounting departments by increasing the
timeliness of accounting information. Accountants can now prepare reports and
operationsand analysis that give
management an accurate picture of the client firm under review.

(c )Improved accuracy

Errors and fraud are easily detected
as it limit the number of accountants that have access to financial
information. Less access by accountants ensure that financial information is
audited by only qualified accountants or supervisors.

(d)Reporting deadline/testing processing.

Since the advent of ICT, accountants
now process large volume of financial information quickly through the use of
some audit software such as CAAT.

Reporting that might have taken an
accountant months or years to prepare can be done within a relatively short
period of time, thereby aiding companies in cost control, which increase the
companies overall efficiency.

(e)Better external reporting

Investors can be inform on time on the
liquidity of thecompany, and make
informed decision as to whether to invest in the company or not. The existing
shareholders will know the performance of the directors and how efficient they
are.

2.3.7Auditing in ICT environment

At this point, the auditor tries to
evaluate the effectiveness of the internal control system and the weakness as
well relating the manner in which electronic datas are been processed, the time
it take, the nature and the extent to which they is compliance base on substantive
audit procedure. However, these can not be effectively achieved without a prior
knowledge of computer system in planning, organizing, directing and
controlling.

2.4Summary

i.Computer hardware

These are the physical parts of
computer that can be seen, felt and touch. It include the input and output
components firm like audit purchase large number of laptops to help them carry
out their audit work at any point in time. These have replace the use of
desktops computer which can not be move from time to time.

In order for audit firms to carry out
their task effectively, timely and accurately, the accountants try to construct
and expand in their network base infrastructure. This may be increase in the
bandwidth or the installation of central network system with the help of Local
Area Network (LAN). Various branches can loop network from the main central
network through the help of Virtual Private Network (VPN).

ii.Computer softwares.

These are the part of the computer
system that can neither be seen nor touch but are fully active for the smooth
operation of the computer system. Softwares are programs that assist a
particular task to be performed . firm have software that suit their purpose
such as DMS, Turbo tax etc. some software like CAAT are design to fit the audit
style of the professionals in the firm. Prior to the invent of these software,
preparation of audit work paper is obsolete as the software does that.

iii.Audit software

These
are software that are developed to serve audit purposes, most often, the generalized
audit software (GAS). Design of audit program created for a particular audit
will serve the needs of testing the audit programs of the clients. These
program have a function of checking calculations, examining of records,
corrections and comparism of clients records with the data obtained through
other procedures.

iv.Nature of evidence generated using ICT

As
a starting point, the evidence generated and or created using ICT are
documentary evidence, since holding otherwise, that the oral evidence would
amount to standing logic on its head. ICT stands as a long lasting evidence
store house for clients companies.

v.Capturing Economic Events

Prior to
the 1960s, the accountant was perceived as a bookkeeper whose primary
responsibility was ensuring that records were kept. The accountant fought a
constant battle against the failure of records.

On the
low-value end of the spectrum falls the traditioned functions of identifying,
measuring, recording accounting transactions as they pierce the boundary of the
entity. But now, most of these functions are routines and predictable, cleverly
written computer program can handle most of these activities.

vi.Junior and senior Auditors.

Most of the
task of the junior auditors like preparation of audit working paper and audit procedures
are relatively repetitive and involve substantial calculations and referencing
across different accounts. Computer applications can automate such structured
task and substantially reduce the processing time and error.

Senior auditors assist in audit plan
development, organization of audit activities, supervision and review of the
work of senior auditors. The FIRM’S audit software organized all required audit
procedures in a common list and cross-referenced them to items in the working
paper.

Since
electronic presentation of information facilitate user’s information
acquisition (Jones et al, 1993), a senior auditor is likely to benefit from the
convenient information gathering and organization enabled by the new software.

CHAPTER THREE

Research methodology

3.1Introduction

Research methodology is the process of
collecting data for research projects.

This
chapter describes the techniques and procedures used by the researcher in
conducting the study and gathering the data for the study.

These
research is designed to survey the application and impact of ICT on accounting
practice, in particular the audit firm.

It includes the description of the
population of the study, the sample size, sampling techniques, source of data,
method of data collection and method of data analysis and testing hypothesis.

3.2Research Design

This research is design to ascertain the
use of ICT on accounting practice. These work is descriptive incline and a
survey research.

The
research is based on the impact of ICT environmentand the use in financial accounting practice
towards the using of audit as a base for all financial accounting practice at
large.

3.2.1 Population

The
population selected was designed to obtain adequate and diverse views regarding
the level and impact of ICT on accounting practice. It consist of accountants
in the accounting and audit department of United Bank for Africa(UBA) Makurdi
Branch, Benue State Ministry of Finance, Office of the Accountant General.

3.2.2Sample size

The sampling size to be use in this
research work constitute of twenty (20) staffs of accounting departments and
ten (10) in an audit firm making the total of thirty due to the constraints of
gaining access to relevant information for each organization.

3.2.3Nature and source of data.

For the sake of these work, both primary
and secondary data are used in the study. The primary data are collected by the
researcher through the use of questionnaires while the secondary data are
collected from already published accounts.

3.2.4Method of data collection and analysis

Data are collected with the help of
questionnaires issued out to staff in that organization. The questionnaires are
design in such a way to enable the respondents to provide answers as to the
impact of ICT on accounting practice and the problem associated with it.

The questionnaire is made up of twenty
(20) question from which the respondent is expected to choose the option he/she
consider suitable for him by ticking appropriately.

3.2.5Techniques of data analysis.

The use of Chi-square test was employ in
these research base on the responses gathered from the respondent through
questionnaires prepared for the sake of the research.

In these study, the use of percentage ,
simple averageand chi-square will be
use in taking the hypothesis.

Because of the manner in which data are
been collected, the level of significance is 5% and the level of confidence
interval is 95%.

Chi-square
formula is given as:

X2
=∑(O−E)2

E

Where: X2
= Chil-square

∑=Summation

O= No of observation

E= No of expected frequency

3.2.6Decision
rule

A set of decision rule is important as to
the null or alternative hypothesis.

This rule
states that:

Ho
should be rejected if the probability of obtaining a value of test statistic of
a given magnitude, Ho is true, it is equal or less than some small
number, α. It should
be accepted if the probability of obtaining a value of the test statistic not a
given. When Ho is false, is more than some small number α.

3.3 Summary/limitation

The
data collected undergoes several hands and opinion of people base on what they
feel about the impact of ICT on accounting practice. The work suffer the
problem of getting information from audit department and other source, thereby;
making it more difficult to draw conclusion as to the impact of ICT on
accounting practice.

The
computation error might also make the reliability of this work to be
questionable.

About Me

Am Prince Linus Upa, BSc, ICRM, SIIT,AFA and ICAN in view. Am the founder and CEO of Upa forex and ICT. we are specialize in delivery services. We offer consultancy service, Research,Training, charity etc. you can contact us any time.